Stocks post gains for the week

NEW YORK (CNNMoney) -- U.S. stocks ended a strong week on a low note Friday as ongoing concerns about the European debt crisis overshadowed a better-than-expected report on the U.S. job market.

The Dow Jones industrial average (INDU) fell 20 points, or 0.2%, to close at 11,103. The S&P 500 (SPX) lost 9 points, or 0.8%, to 1,155. The tech-heavy Nasdaq composite (COMP) dropped 27 points, or 1.1%, 2,479.

Despite the poor performance Friday, all three indexes posted gains for the week. The Dow rose 1.7%, the S&P 500 added 2.1% and the Nasdaq rose 2.6% over the last five days.

The gains were driven largely by speculation that European leaders are warming to the idea of pumping more money into troubled banks. On Thursday, the European Central Bank announced plans to increase the flow of capital to the banking system.

But investors remain skeptical that policy makers will be able to effectively resolve the underlying sovereign debt problems in Greece, Portugal, Ireland, Italy and Spain.

"The market knows that talk is cheap," said Ryan Larson, a senior equity trader at RBC Global Asset Management. "At some point, the talk has to turn into action if this rally is going to be sustained."

On Friday, stocks opened higher after the U.S. government said employers added 103,000 jobs in September, much more than expected.

But concerns about the debt crisis in Europe were thrust back into the spotlight after Fitch cut its credit ratings for Italy and Spain.

Doug Cote, chief market strategist at ING Investment Management, said eliminating the threat of a banking crisis in Europe could set the stage for a sustained rally.

"All the market wants is a fence built around the risk in Europe," he said. "And it looks like that's happening."

Cote said stocks could move sharply higher if policy makers in Europe contain the crisis and investors refocus on the economic and corporate "fundamentals."

"The market has priced in a worse case scenario and once that gets unwound, we may be in for an explosive rally," he said. "We're telling clients: don't capitulate because this could turn around very fast."